What Should You Do First to Own a Short-Term Rental?

If you’re dreaming about owning a short-term rental (STR) property, you’re not alone. The idea of generating extra income, hosting guests, and building long-term wealth is exciting. But before you dive into property listings and Airbnb decor boards, there are a few critical first steps you need to take.

Here are the three things you should do first before buying your short-term rental:

1. Research the Best Market

The success of a short-term rental comes down to location. Not every city, or even neighborhood, is STR-friendly, so do your homework early.

Look for areas with:

High occupancy rates
Consistent year-round demand (not just seasonal traffic)
STR-friendly zoning laws and regulations

Use data tools like AirDNA, Mashvisor, or Rabbu to analyze potential markets. These platforms can show you average nightly rates, monthly income projections, and competition levels.

Pro tip: Don’t assume your hometown is the best option. Let the numbers guide you.

2. Get Clear on Your Budget + Financing

Before you fall in love with a property, make sure you understand your full investment picture. That includes:

Down payment (usually 15–25% for investment properties)
Closing costs
Furniture, linens, and STR setup essentials
Startup services (cleaning, smart locks, professional photos, etc.)

Talk to a lender about STR-friendly mortgage options, including:

DSCR loans (Debt Service Coverage Ratio): Based on projected rental income, not personal income. Read more in my other blog posts: “Could a DSCR Loan Help You Get Into The Short Term Rental Market?” and “30 Proven Ways to Fund Your First Short-Term Rental: From No Money Down to Creative Financing.”
Investment property loans

Pro tip: Many STR hosts underestimate furnishing and setup costs. Budget at least $10–15K to start, depending on size.

3. Learn the Local Laws + Permits

Nothing will derail a deal faster than discovering you can’t legally rent it short-term.

Before making any offers:

Check if the city/town requires a STR license or permit
Understand any zoning restrictions
Review HOA or condo association rules
Know the tax requirements (local STR tax, occupancy tax, etc.)

Some areas have moratoriums or outright bans on STRs, others are very supportive. Don’t assume, verify.

Pro tip: Visit the city’s official website or call the planning/zoning department to get accurate, up-to-date info.

Final Thoughts

Buying a short-term rental is more than just purchasing a property, it’s building a business. Taking the time to research the market, know your numbers, and understand the legal landscape will set you up for long-term success (and fewer expensive surprises).

I’ve been through this process myself, and I’m here to help you make confident, informed decisions from day one.